Countervailing forces propel patent reform

Some worry the rulings may have gone too far.
"It takes some of the teeth out of the patent system," said Baum of LES. "You start wondering whether more foreign companies will decide to roll the dice and risk infringement."

Some observers note that the House bill passed this month, H.R. 1908, does not take into account the recent court actions and thus calls for redundant measures in reducing damages and limiting use of willful-infringement suits.

The bill also limits patent lawsuit venues to courts in jurisdictions where the infringement took place or where the parties do business. Currently, many suits are filed in the East Texas district, known for having juries favorable to small companies suing large corporations.

Further, the legislation defines a streamlined administrative process for reexamining patents when they are challenged. And it calls for a U.S. patent office shift from a "first to invent" to a "first to file" policy more in line with the policies of patent offices around the world.

The IEEE-USA came out strongly opposed to the bill, saying it would weaken the patent system and thereby worsent the already bad job market for U.S. engineers.
The group also compiled a list of about 200 companies and universities that opposed the bill. The list includes some large concerns, such as the AFL-CIO, the American Intellectual Property Lawyers Association, General Electric, Medtronic and Texas Instruments.

"I fundamentally believe this reform bill is wrong," said Keith D. Grzelak, chairman of the IEEE-USA's intellectual-property committee. "The patent system has been working fine for 200 years, especially for small, growing companies-the startup companies where a lot of the new hiring will be for engineers in this country," added Grzelak, who is also an IP lawyer with Wells St. John P.S. (Spokane, Wash.).

Grzelak said the first-to-file provision would benefit big companies over startups and individual inventors. "If it's a race to the patent office," he said, "the big behemoths will win."

"We've seen that concern [about an unfair advantage for larger companies] narrowing to a smaller but more ardent band of opponents [of reform]," said Don Kelly, president of the United Inventors Association. "Others say the 200 year-old patent system has made the U.S. a world technology leader and should not be changed to suit international harmonization."

The move to limit damages and create an easier method to challenge existing patents will also weaken the system, said Grzelak of IEEE-USA. "The new system brings a lot of debate about the value of patents, and that value will be diminished," he said.

In a speech earlier this year on the House floor, Rep. Dana Rohrabacher, R-Calif., called the bill the "Steal American Technologies Act" because it would mandate the publication of all patent applications 18 months after the patent is applied for, whether or not the patent has been granted.

"This legislation will facilitate China, India and other countries in their efforts to steal our creative genius" he said.

Perhaps most damning opposition has come from the administration, which released a statement through the patent office the day the bill went to the floor for a vote. The nearly 900-word statement notesthat the administration supports patent reform but disagrees with at least seven aspects of H.R. 1908.

"The basis of our opposition to the bill is in its changes to damages provisions," said Dudas of the USPTO.
[[Specifically, the administration said the bill puts too many limits on a court's discretion in assessing damages in patent infringement cases. It also said the recent court decision in the Seagate case set limits on litigants' ability to claim willful infringement and thus made that part of the bill unnecessary.

The administration broadly supports the idea of moving to a first-to-file system and of setting up a post-grant review process as low-cost alternative to litigation of existing patents, according to the statement. On both scores, however, the statement calls H.R. 1908 to task for how it would enact those moves.

The administration said it would work with Congress on addressing its concerns in future legislation. But the statement does not explain why the administration failed to engage with lawmakers on H.R. 1908, since the bill was introduced back in April.